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under a “worst case scenario,” he reportedly added.
As a solution to the NPLs problem, the banking watchdog informed in November local lenders they are to delete toughest-to-collect Group 5 NPLs from their balance sheets . The move against Group 5s makes it even more challenging to track the real situation with NPLs in Turkey. The official data was already pretty much useless given debt restructurings and the deployed classification methodologies .
The European Bank for Reconstruction and Development (EBRD) on November 8 presented a report to Turkish regulators and banks that makes 30 recommendations on how Turkey can restructure laws and markets to enable foreign companies to easily buy some of the tens of billions of dollars in bad debt held by its lenders . The proposals include permitting the securitisation of non-performing loans (NPLs), the protection of lenders from embezzlement charges and allowing sales to firms licensed elsewhere.
The BDDK banking regulator in September instructed the banks to reclassify around $8bn in loans and provision for losses.
Bankers and the EBRD met in October to study regulatory changes to allow foreign investors to easily buy Turkish NPLs, a market that some say could be based on some $50bn in debt.
Presently, Turkish banks can only sell NPLs to fellow Turkish banks or domestic asset management companies.
SC Lowy and Houlihan Lokey are reportedly among prospective international players scouting for business opportunities from Turkey’s attempts to clean up its multibillion-dollar bad loan market that is a hangover from the derailed debt-fuelled era of turbo-charged growth .
As much as $50bn in distressed debt is estimated by analysts to be weighing on the Turkish banks’ balance sheets, equivalent to 8% of the total loan market.
8.1.5 NIMs & CARs
38 TURKEY Country Report OUTLOOK 2020 www.intellinews.com